Due to the onset of the second Covid wave during March-May, economic recovery suffered a major setback, the IMF said.
In the latest edition of its World Economic Outlook (WEO) report, IMF said: "Growth prospects in India have been downgraded following the severe second Covid wave during March-May and expected slow recovery in confidence from that setback."
However, India's growth prospects for FY22 remains higher than all other major economies. Despite the cut, India's GDP is projected to grow at the fastest pace of 9.5 per cent among large economies, followed by China at 8.1 per cent and the US at 7 per cent.
For 2022-23, IMF expects economic growth of 8.5 per cent, larger than the 6.9 per cent it had projected in April.
The Indian economy was gradually recovering from a deep contraction caused during the pandemic-stricken 2020 which had lead it into a technical recession.
However, as it started recovering to pre-pandemic levels, the country was hit by a second and more severe Covid wave.
Global economy to grow at 6%
Overall, the IMF said that it expects the global economy to expand 6 per cent this year — a dramatic bounce-back from the 3.2 per cent contraction in the pandemic year of 2020.
The United States is expected to register 7 per cent growth this year, a sharp reversal from last year's 3.5 per cent drop and an upgrade from the 6.4 per cent growth the IMF had forecast for 2021 back in April.
Outlook for China, the world's second-largest economy after the United States, was marked down to 8.1 per cent after the government scaled back spending and investment.
"The recovery is not assured until the pandemic is beaten back globally," Gita Gopinath, the IMF's chief economist, wrote in a blog post.
'Vaccine access is key'
On one hand it sharply upgraded its economic outlook this year for the world's wealthy countries, especially the United States, as Covid-19 vaccinations help sustain solid rebounds from the pandemic recession.
While on the other hand, it downgraded forecast for poorer countries, most of which are struggling to vaccinate.
"Vaccine access has emerged as the principal fault line along which the global recovery splits into two blocs," it said.
The IMF also warned that the emergence of highly infectious virus variants could derail the recovery and wipe out $4.5 trillion cumulatively from global GDP by 2025.
More than half of that lost wealth would come from rich nations in the event new variants of the coronavirus spread unchecked.
IMF slashes India's GDP growth forecast to 9.5% for FY22 - Times of India
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